With reference to Basel III, consider the following statements:
1. Basel III is an international regulatory accord designed to improve the regulation and risk management of the banking sector
2. Basel III increased capital adequacy and focused on liquidity.

Which of the statement(s) given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Question

With reference to Basel III, consider the following statements:
1. Basel III is an international regulatory accord designed to improve the regulation and risk management of the banking sector
2. Basel III increased capital adequacy and focused on liquidity.

Which of the statement(s) given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

ONLiNE UPSC · Accepted Answer

Statement 1 is correct: Basel III is an international regulatory accord designed to improve the regulation, supervision, and risk management of the banking sector.
Basel III is part of an evolving framework that adapts to changes in national economies and the financial landscape.

Statement 2 is correct: Basel III increased capital adequacy requirements and placed a strong emphasis on liquidity and leverage ratios. Basel III raised the minimum capital requirements for banks, requiring them to hold more high-quality capital to absorb potential losses.

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